Citi Rejection Stings Pandit

CEO Licks Wounds After 'Stress Tests' That Led Fed to Veto Capital Plan

By

Robin Sidel,

Dan Fitzpatrick and

Victoria McGrane

Updated March 15, 2012 9:52 a.m. ET

Citigroup's failure to get regulators' approval to return capital to shareholders caught executives and investors off guard and dealt a blow to Chief Executive Vikram Pandit's efforts to revive investor confidence in the bank.

The board of directors held a meeting by telephone shortly after the Federal Reserve said Tuesday it had turned down the capital plan the New York company submitted as part of its latest "stress test," according to people familiar with the situation. Neither Citigroup nor the Fed...